The Federal Reserve Board has proposed a rule change to stabilize the capital requirements for large financial institutions. The changes would calculate the stress capital buffer requirement by averaging the capital declines from the past two years of stress tests, instead of just one, to reduce volatility. Additionally, the implementation date for the new requirements would be moved from October 1 to January 1, giving firms extra time to comply. These adjustments aim to make capital planning easier and lower regulatory burdens without significantly affecting overall capital demands.
Simple Explanation
The big financial boss wants to make it easier for banks to save enough money for a rainy day by checking how they're doing over two years instead of one. They're giving banks a little more time to get ready for new rules and making the paperwork they have to fill out a bit easier.